THSI DOCUMENT CONTAINS QUESTIONS AND ANSWERS TO THE EXPECTED QUESTIONS FOR FOR ECS 1601 ASSIGNMENT 2 OF 2022 SEMESTER 1. GOING OVER IT BEFORE TAKING THE TEST WILL MAKE SURE THAT YOU SCORE OVER 75%.
Started on Thursday, 23 March 2023, 11:26 PM
State Finished
Completed on Thursday, 23 March 2023, 11:48 PM
Time taken 22 mins 2 secs
Marks 17.00/20.00
Grade 85.00 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
Use the following information below to the question:
Which country has an absolute advantage in the production of petrol?
a. Russia has an absolute advantage in the production petrol.
b. Both countries have an absolute advantage in the production of petrol.
c. Russia has a relative advantage in the production of petrol.
d. Ukraine has a relative advantage in the production of petrol.
Your answer is correct.
Russia has to give up less petrol to produce one drone than Ukraine. Refer to pages 65-68 of the prescribed book, page 61in Part 1 of the study
guide, and pages 44-45 in Part 2 of the study guide.
Question 2
Correct
Mark 1.00 out of 1.00
Suppose Katlego owns a jewellery import business. Katlego imports necklaces and other jewellery from the United States. If there is a
depreciation in the Rand against the Dollar, which of the following is correct about Katlego’s business?
a. Katlego would need more Rands to purchase the jewellery and this will cause her to reduce her prices.
b. Katlego would need less Rands to purchase the jewellery and will reduce her prices.
c. Katlego would need less Rands to purchase the jewellery and this will raise her prices.
d. Katlego would need more Rands to purchase the jewellery and will raise her prices.
When the domestic exchange rate depreciates, it implies that more Rands are needed to purchase US-denominated goods and services. As a
consequence, the cost of inputs and final goods in the importing country (assuming the importing country experiences the depreciation) will
increase and this will increase the price of the goods supplied in the domestic market.
,Question 3
Incorrect
Mark 0.00 out of 1.00
Import tariffs are generally used to protect domestic industries from foreign competition, they often lead to a(n )___________to society.
a. net welfare gain
b. net welfare loss
c. net economic loss.
d. net economic profit.
e. economic growth.
Your answer is incorrect.
Import tariffs, as part of a range of protectionist measures that governments can use, are duties or taxes imposed on products imported into a
country. They are generally used to protect domestic industries or sectors from foreign competition, but it can be shown that they result in a net
loss of welfare to the domestic economy. See page 70 in the prescribed book.
Question 4
Correct
Mark 1.00 out of 1.00
The balance of payments is a record of the transactions of each country with its trading partners. Use the following passage to answer the
question:
Source: Quartz Africa, https://qz.com/africa/2122487/african-governments-now-want-to-tax-your-netflix-and-chill/ (accessed 10 May 2022)
Which of the following is correct?
a. The streaming services will be recorded in the finance account as an inflow.
b. The streaming services will be recorded in the current account as an outflow.
c. The streaming services will be recorded in the financial account as an inflow.
d. The streaming services will be recorded in the current account as an inflow.
The balance of payments records the transactions that a country conducts with the rest of the world. Goods and services are recorded in the
current account, while financial transactions such as trading in shares are recorded in the financial account. See Section 5.5 of the prescribed
book.
,Question 5
Correct
Mark 1.00 out of 1.00
In the 2020 Budget Speech, the National Treasury announced that the import tariff will decrease from 5.37% in 2019 to 4.40% in 2020, a 0.97%
decline. What is the aim of the import tariffs and what does this imply to the domestic firm’s production?
a. an import tariff is used to protect domestic firms, a 0.97% decline in import tariff will discourage domestic production and make
imported products cheaper.
b. an import tariff is used to protect foreign firms, a 0.97% decline in import tariff will encourage foreign firms to produce more for export
to SA.
c. an import tariff is used to protect domestic firms, a 0.97% decline in imports is too small to have an impact on the domestic firm’s
production.
d. an import tariff is used to protect domestic firms from trade exploitation, a 0.97% decline in imports will make imported goods more
expensive for domestic firms.
An import tariff is used to protect domestic firms from trade exploitation, a 0.97% decline in the import tariff will discourage domestic
production and make imported products cheaper.
, Question 6
Correct
Mark 1.00 out of 1.00
The figure below shows the demand and supply curves for US dollars (in terms of the South African Rand) in the foreign exchange market. Use
this information to answer the question below.
In the diagram above, an increase in American tourists to South African game reserves would cause the
a. supply curve to the right.
b. demand curve to shift to the left.
c. supply curve and the demand curve to remain unchanged.
d. demand curve to shift to the right.
e. supply curve to shift to the left.
Your answer is correct.
An increase of American tourists in South Africa will increase the supply of Dollars on the South African foreign exchange market, ceteris
paribus. The supply curve for dollars on the South African Foreign market will thus shift to the right while the demand for dollars will remain
constant, ceteris paribus. See pages 71 to 76. Figure 4-3 and Table 4-1 in the prescribed book.
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